The banking ‘cartel’ is trying its best to intimidate the government to reverse the interest rate-capping law through the Budget that will be read in Parliament in a few days.
The plan so far has been to starve businesses of cash and hope that the issue will be politicised. And true, so far businesses have suffered a great deal.
But everybody hopes that the government will up its game and crush the cartel by licensing more global banks to come and level the field by offering even lower interest rates on loans.
Additionally, the Central Bank and The National Treasury can fast-track liberalisation of uptake of government bills and bonds so that anybody can lend the government money…not just banks.
This will compel banks to lend money to businesses at the going rates under the capping law.
Another way is for GoK to reduce local borrowing by either pushing up tax compliance to around 85 per cent from the current 44 per cent (no, tax should be raised…compliance is more practical, which involves better application of rule of law).
Today, even hackers are raiding government taxes because they know they will escape punishment through bribery of law enforcement agencies.
If the government gives in to this vicious cartel, then it will become a political hot potato for Jubilee in an election year. It will also be a betrayal of the people.